Washington, D.C. (July 28, 2025) – In a letter sent to Treasury and the Internal Revenue Service (IRS), the American Institute of CPAs (AICPA) provided comments on two proposed regulations: REG-112261-24 (nonrecognition of gain or loss in corporate separations, incorporations, and reorganizations) and REG-116085-23 (multi-year reporting requirements for corporate separations and related transactions).
Under the current proposed regulations, taxpayers are required to document and report to the IRS a detailed plan of distribution or reorganization. The plan must be adopted before the first step is undertaken and be carried out in an expeditious manner.
The AICPA provides the following recommendations regarding divisive reorganization, acquisitive reorganization, and reporting requirements:
Relax the plan requirement to recognize administrative and commercial practicalities in carrying out non-recognition transactions.
Extend the timing of plan documentation requirement from the date the first step of the plan takes place to the date the transactions included in the plan must be reported on the parties’ relevant federal tax filings.
Revise the defective plan resolution language from an approach in which action from the Commissioner is necessary to confirm qualification to one in which the taxpayers can report qualification in all instances in which the requirements for non-recognition appear to be met, reserving discretion for the Commissioner to recharacterize transactions where appropriate.
“The AICPA recommends relaxing the proposed regulations’ reorganization or distribution plan requirement to make it more administrable and practical for taxpayers and practitioners,” said Ning Yim, Senior Manager for Tax Policy & Advocacy with the AICPA. “Extending the time needed to document a plan of reorganization or distribution will be of great benefit to both taxpayers and tax practitioners.”
About the American Institute of CPAs
The American Institute of CPAs (AICPA) is the world’s largest member association representing the CPA profession, with 397,000 members and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education, and consulting. A founding member of the Association of International Certified Professional Accountants, the AICPA sets ethical standards for the profession, attestation standards, and U.S. auditing standards for private companies, not-for-profit organizations, and federal, state, and local governments. It develops and grades the Uniform CPA Examination, offers specialized credentials, partners across the profession to build future talent, and drives continuing education to advance the vitality, relevance, and quality of the profession.
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Contact: Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com